Cash Machine Trading Cheap – Trade Desk Stock Set to Run?
We think Trade Desk (TTD) stock is worth a look: It is growing, producing cash, and available at a significant valuation discount. Companies like this can use cash to fuel additional revenue growth or simply pay their shareholders through dividends or buybacks. Either move makes them attractive to the market.
The stock is available at a significant discount to its 3-month, 1-year, and 2-year highs.
TTD Has Strong Fundamentals
- Cash Yield: Trade Desk offers an impressive cash flow yield of 8.1%.
- Growing: Revenue growth of 18.5% over the last twelve months means that the cash pile is going to grow.
- Valuation Discount: TTD stock is currently trading at 46% below its 3-month high, 77% below its 1-year high, and 85% below its 2-year high.
Below is a quick comparison of TTD fundamentals with S&P medians.
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| TTD | S&P Median | |
|---|---|---|
| Sector | Communication Services | – |
| Industry | Advertising | – |
| Free Cash Flow Yield | 8.1% | 4.3% |
| Revenue Growth LTM | 18.5% | 6.8% |
| Operating Margin LTM | 20.3% | 18.6% |
| PS Ratio | 3.4 | 3.3 |
| PE Ratio | 21.9 | 24.3 |
| Discount vs 3-Month High | -45.7% | -9.5% |
| Discount vs 1-Year High | -77.4% | -11.7% |
| Discount vs 2-Year High | -85.5% | -14.1% |
*LTM: Last Twelve Months
But What About The Risk Involved?
While TTD stock may be a compelling investment opportunity, it’s always helpful to be aware of a stock’s history of drawdown. TTD took a hit of about 36% during the 2018 correction, dropped more than 54% through the Covid pandemic, and plunged over 64% in the recent inflation shock. Even with solid fundamentals, the stock hasn’t been immune to major sell-offs. When volatility spikes, steep declines like these show the risks still run deep. But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, and outlook changes. Read TTD Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
If you want to see more details, read Buy or Sell TTD Stock.
Other Stocks Like TTD
Not ready to act on TTD? You could consider these alternatives:
These stocks have positive revenue growth, high free cash flow yield, and are trading at a meaningful discount to 3M, 1Y, and 2Y highs.
A portfolio that was built starting 12/31/2016 with stocks that fulfill the criteria above would have resulted in average 6-month and 12-month forward returns of 25.7% and 57.9% respectively, with a win rate (percentage of picks returning positive) of above 70%.
Portfolios Over Individual Stock Picks
Single stocks swing wildly, but staying invested matters. A well-built portfolio helps you stay invested, captures upside, and softens the blows from individual stocks.
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